Why is there a distinction between May and Can in the English language and rarely in other languages (i.e. Spanish)? Other languages seem to use context or tone of voice to distinguish between the two meanings we use. Why do so few Americans actually use the words appropriately any more?

I think that's a feature exclusive of Germanic languages, cf. German können x dürfen, Dutch kunnen x mogen, Swedish kunna x få, Danish kunne x måtte. But in all those languages there is a lot of overlapping between ability and permission, and English is not different.

can, mayCan and may are most frequently interchangeable in senses denoting possibility. Here can denotes not power nor permission but possibility:

Can we, with manners, ask what was the difference - Shakespeare, Cymbeline, 1610

It's not much of a stretch of meanig from the use in Cymbeline to

"Can I come in, Frank?" - Anthony Trollope, Dr. Thonre, 1858

If our files are reasonably accurate reflections of present-day use, the "possibility" sense of can s the one most frequently used in edited prose:

Naturally, we are always asking: Can I marry the girl I love? Can I sell my house? - W.H. Auden, Columbia Forum, Winter 1970

... an infinite number of lines... can be drawn through a point - Robert W. Marks, The New Mathematics Dictionary and Handbook, 1964

The transition from "possibility" to "permission" is subtler than the handbooks think. Noah Webster's 1828 dictionary contained this as part of his definition 5:

... to be free from any restraint of moral, civil or political obligation, or from any positive prohibition.

This sense involves nothing more than permission given by not prohibiting. It constitutes the most common "permission" sense we find written:

... took off from her [the bride's] head the myrtle reath, which only maidens can wear - Henry Adams, letter, 17 May 1859

The new prayers are not compulsory, and vicars can use the old forms if they like - N.Y. Times, 11 Nov. 1979

You cannot enter, but you can walk round part of the thick white walls - Nadine Gordimer, Atlantic, November 1971

The cannot in the last example distinclty implies a denial of permission. Laberts 1972 and Garner 1998 point out that ofor negative uses in which permission is denied, cannot and can't have largely replaced may not and mayn't.

The use of can in a direct question to request permission is basically an oral use. These examples come from recorded speech or fictional speech:

Can I proceed without interruption? - Senator Stuart Symignton, at the 1953 Army - McCarthy hearings (Pyles 1979)

If this is almost exclusively an oral use, why should we find it so often mentioned in books on writing? The reason we find it in handbooks meant for college and gradutate-school students, such as Cook 1985, seems to be that it has simply been carried forward from books aimed at schoolchildren. The can/may distinction is a traditional part of the American school curriculum. The fact that the distinction is largely ignored by people once out of school is also a tradition.

Conclusion: The uses of can which request permission are seldom found in edited prose. In general, this use of can belongs to speech, reported or fictional. In negative statements, cannot and can't are much more frequently used than may not and mayn't; use in negative contexts is seldom noticed or criticized. May is still used, of course:

And I said, 'Mr. President, I want to talk to you. If I may, I'll come right up there and see you.' - Harry S. Truman, quoted in Merle Miller, Plain Speaking, 1973

If I may say something, Romance language speakers have no problem using Spanish/Portuguese/Catalan poder, Italian potere, French pouvoir, Romanian a putea indicating permission or possibility. Slavic language speakers the same.

I have just always used "can" when asking of I have the ability to do this. I use "may" when I am asking if it is ok to do this, or if I am allowed to do this.
Lots of time I have the ablilty, but maybe not the permission.

As always, I cant add very much to BD's comments on Germanic languages. What about the Romance set? For Slavic, Russian has for being able to, знать and уметь, and for being allowed to, мочь. Chinese has in the former case, hui or neng, and for the latter, keyi. I suppose the degree of fuzziness betewen those alternatives will vary between languages, though.

If I may say something, Romance language speakers have no problem using Spanish/Portuguese/Catalan poder, Italian potere, French pouvoir, Romanian a putea indicating permission or possibility. Slavic language speakers the same.

For Slavic, Russian has for being able to, знать and уметь, and for being allowed to, мочь

have already offered my 2 cents to this, but I will say that there are some very good replies since I wrote mine.
I am German on my dad's side and Scots/Irish on my mom's side. That must be why I am so careful with what I use. Or, it could be that I am just an English teacher (retired) and very conscious of the correct teaching ala Harbrace. I would not dare offer another thought; there are too many very well educated folks here in these parts. I have been shot at too many times. I will thus take the middle path and say that you may say what you will say whatever it is you want to say.
mamawsandy

When used to express permission or possibility, can and may are often used interchangably without a problem. Seems to me the biggest distinction between can and may is formality. Can appears to be less formal than may in this context.

More Formal: You MAY smoke in here.
Less Formal: You CAN smoke in here.

But what about expressing theoretical possiblity? Suddenly the two are no longer interchangable:
The road can be blocked (It's possible to block the road).
The road may be blocked (It's possible the road is blocked [so pick an alternate route])

I do believe that the reason so many Americals, or other people in this country, use the words incorrectly is because they did not learn the correct usage in school I read here that we should not be so fussy and should allow freedom in usage, But when it is glaringly apparent that the wrong word is used, then we ask why.
I can give testimony that many students in the 7th or 8th grades do not know beans about correct usage. They are often appaled at the correct way because they have never heard it used. But when taught the correct usage, they seem glad to know they are using the right word. Most people want to sound intelligent, but just do not know what the correct usage is. This includes some adults.
I was in Barns & Noble the other day, and a man from out of state was in the same section as I. He was looking for a book on the correct usage. He was to give a lecture thatnight. He asked me what the correct usage of I/me is. I told him as simply as I could for I had little time to talk. He said he wished he was sure of the correct usage in all the words. This is sad because he must give lectures very often. I wanted to sit at a table and teach him all he had time for, but my hubby was waiting in the car.
Sorry situation here in the good ol' US of A. Students in other countries mock our lack of a good education.

Sorry about the misspelling and bad typing. I meant to click preview and correct, but clicked submit instead. Sure with there was a handy spell checker on this site. I have one, but it won't check this message.